Spotlight: Russian economy stabilizes amid slower global growth, lower oil prices

The 20th St. Petersburg International Economic Forum kicked off here Thursday amid slowing global economic growth and decreasing world oil prices hovering around 50 U.S. dollars per barrel.

After more than a year's anti-sanction and anti-crisis efforts, inflation in Russia has stabilized and is going down, so there is hope that the country's economy will start to grow in the second half of this year.

Participants at the forum in Russia's second-largest city intend therefore to capitalize on the new global economic reality, as the event's slogan states.

POSITIVE SIGNS

The Russian economy has started showing signs of improvement this year.

It is expected that the country's gross domestic product (GDP) will grow by 1.4 percent next year, up 0.3 percentage points from the previously expected level.

The Bank of Russia announced on June 10 it would cut its key lending rate by 0.5 percentage points to 10.5 percent for the first time in ten months.

According to the Central Bank, the cut resulted from the success in stabilizing inflation, lower inflation expectations and risks, as well as signs of a recovery in the economy.

Russian Central Bank Governor Elvira Nabiullina believed that the normalization of the economic situation stems not only from improvements in the oil market, but also from a continued development of positive structural trends, including the growth of non-oil exports and import substitution.

The International Monetary Fund, World Bank and Moody's rating agency have improved their forecasts for the Russian economy's development for 2016 and 2017.

The World Bank said in its latest study of the status and prospects of the world economy that it expected Russia's GDP to decline by 1.2 percent this year, 0.7 percentage points less than the previous forecast.

EFFECTIVE ANTI-CRISIS MEASURES

The Western media have repeatedly predicted that the anti-Russian sanctions and the fall in world hydrocarbons prices would put the Russian economy on the verge of collapse.

Two years have passed since the introduction of the punitive measures, however, and the Russian economy has not collapsed.

The government presented an action plan in March to ensure Russia's sustainable socioeconomic development in 2016, as well as an anti-crisis plan.

The anti-crisis plan contains 120 items, envisaging support to sectors facing difficulties but having great potential like car-building, light industry, transport and agricultural engineering.

The government plans simultaneously to carry out a structural reform of the economy, which will determine the economic development of the country after 2017, and will include support of small and medium businesses, a reform of the judicial system, and an optimization of public spending.

In the context of the ongoing crisis, the Russian government emphasizes the need to increase revenues and reduce costs with such measures as budget cuts, cuts in government spending and privatization of state enterprises.

Russia is now actively preparing the privatization of state-owned oil giants Rosneft and Bashneft, the state development bank Vnesheconombank (VEB) and some other companies.

It is expected that the privatization of state-owned enterprises in two years will bring an additional 1 trillion rubles (15.3 billion dollars) to the state coffer.

IN SEARCH OF NEW ECONOMIC REALITY

Anton Kobyakov, an adviser to the Russian president and executive secretary of the Organizing Committee of the St. Petersburg International Economic Forum, believed that the world is now facing a new economic reality, and that Eurasia has potential for the next economic breakthrough.

Russian President Vladimir Putin has repeatedly said that sanctions and low oil prices will undoubtedly contribute to speeding up the process of reforming economic policy, and the search for new growth points.

Alexander Korbut, vice president of Russia's Grain Union industry lobby, said that Russia has exported 35 million tons of grain since July 2015, including 24.5 million tons of wheat, which made Russia the biggest world wheat exporter.

Last year, Russia exported agricultural commodities for a record sum of 20 billion dollars, which exceeded the country's revenues from arms exports.

Korbut noted that the increased competitiveness of the Russian agricultural sector has occurred largely due to an increase in its overall technological level and to the creation of a new investment platform in agriculture.

Analysts believe that Russia has faced its most serious challenge in the last ten years, but its rich natural resources, opportunities for self-sufficiency, large consumer market and low public debt have given its economy some measure of stability and time to cope, find sources of economic growth and adapt to the new reality. Endi